The Revenue Department on Tuesday rejected tax exemptions sought by Apple, government sources told ET Now. “Apple’s demand with regard to GST rejected since it hasn’t been implemented yet. The Finance Ministry has refused to grant tax exemptions to any one single tech company and will be granting tax benefits for the tech sector as a whole,” the sources added.
According to a recent FE Bureau report Ministry of electronics and IT secretary, Aruna Sundarajan said a decision on incentives to Apple can be taken only after tax rates under GST are finalized. “GST is still evolving. See, what they (Apple) are asking for is, make it profitable for us to manufacture here and therefore give us a favorable duty regime. Exactly how favorable it should be is something that needs to be ironed out. But the first thing is what will be the manner in which this would be reflected in the new GST regime, (firmed up by) the GST Council,” Sundarajan said.
Sundarajan added: “So only once the council decides how the existing trade regime is going to get translated into the new one and how domestic manufacturing incentives are going to get reflected in GST can a decision on Apple’s demands can be taken.” On Apple’s demands regarding making refurbished iPhones in India, the secretary said: “As long as they are exporting (it could be allowed)… They have asked for exports.”
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As part of its preconditions to manufacture in India, Apple had earlier told the government it wants to use its manufacturing unit here (when it has one) to also export “certified pre-owned iPhones”, apart from making new devices. The environment ministry is considering the proposal. The iPhone maker plans to set up only a “pilot project” near Bengaluru initially, and the extent of manufacturing there hinges on the kind of concessions the central government is willing to offer the tech giant.
Apple, which has expressed interest in setting up manufacturing facilities in India, has reportedly sought several sops from the government, including a 15-year customs duty holiday on imports of iPhone kits, new and used capital equipment, and consumables. The California-based tech giant also wants duty cuts on components — completely knocked down (CKD) and semi-knocked down (SKD) units of iPhones — for re-assembly at the finished goods manufacturing line. It has also demanded a relaxation of the 30% local sourcing requirement under the foreign direct investment (FDI) rules.
So far, Apple has not committed anything on investment or prospects of manufacturing and job creation to the central government.